Dilemma for banks?

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Say your a cash saver, no debts and your looking to fix between 1 – 5 years.

How does a bank entice you to one of their fixed rate products now, when knowing full well the savers (us) know full well that interest rates will not stop yet.

Saying this, we need to be mindful that banks need to be prudent and finically responsible on how they run their business, after all they need to make huge profits to please their shareholders.  

TheMilkmansDad

well banks make most of their profits from the loans/mortgage side of things rather than savings. 

banks generally only have market leading savings rates to increase their cashflow (to offer more loans etc).

All decisions are made in a responsible way by each provider depending on their long term aims/objectives agreed by their board members.

dale_cotterill

Thumbs_Up said:

How does a bank entice you to one of their fixed rate products now, when knowing full well the savers (us) know full well that interest rates will not stop yet.

By setting the rates of fixed rate products which reflect the expected movement of interest rates over the period it will be fixed for.

That is why easy access rates are currently below 2%, and many fixed rates over 3%.

eskbanker

Thumbs_Up said:

How does a bank entice you to one of their fixed rate products now, when knowing full well the savers (us) know full well that interest rates will not stop yet.

They'll continue to follow their standard process for setting rates, which will include projections about future interest rates, alongside market intelligence on competitors, their strategic and/or tactical desire for attracting funds, other business targets, etc.

Thumbs_Up said:

Saying this, we need to be mindful that banks need to be prudent and finically responsible on how they run their business, after all they need to make huge profits to please their shareholders.

Naturally, they're commercial organisations that are in business to make a profit - anyone repulsed by that thought can always save with mutuals and the like, depending on exactly how they value their principles....

Thumbs_Up

eskbanker said:

Thumbs_Up said:

How does a bank entice you to one of their fixed rate products now, when knowing full well the savers (us) know full well that interest rates will not stop yet.

They'll continue to follow their standard process for setting rates, which will include projections about future interest rates,

That is sound advice, here, give Andrew Bailey a call on 0208 999 999

isasmurf

Thumbs_Up said:

Say your a cash saver, no debts and your looking to fix between 1 – 5 years.

How does a bank entice you to one of their fixed rate products now, when knowing full well the savers (us) know full well that interest rates will not stop yet.

Saying this, we need to be mindful that banks need to be prudent and finically responsible on how they run their business, after all they need to make huge profits to please their shareholders.  

The US arm of Marcus has the answer. The Rate Bump account. If they offer a higher rate for your term during your term you have the option of switching to the higher rate penalty free for the remainder of your term. There is a limit to how many times you can 'bump' the rate

wmb194

eskbanker said:

Thumbs_Up said:

How does a bank entice you to one of their fixed rate products now, when knowing full well the savers (us) know full well that interest rates will not stop yet.

They'll continue to follow their standard process for setting rates, which will include projections about future interest rates, alongside market intelligence on competitors, their strategic and/or tactical desire for attracting funds, other business targets, etc.

Thumbs_Up said:

Saying this, we need to be mindful that banks need to be prudent and finically responsible on how they run their business, after all they need to make huge profits to please their shareholders.

Naturally, they're commercial organisations that are in business to make a profit - anyone repulsed by that thought can always save with mutuals and the like, depending on exactly how they value their principles....

Mutuals are also profit seeking businesses. They just have odd ownership structures.